The Movie Business
A movie production is really like a small, very specific start up company. With it there is a primary goal, which is the creation of a product that will be financially viable. There are investors that are hoping to see returns on their investment, and there are employees that are making a specified wage for a specified role. Because of this, any movie production should have a business plan that is used so as to make sure it stays on track and that all of its bases are covered. Every film is different and the business plan that you use is going to change between projects, but there are many commonalities. Here are a few tips on how to create a business plan for movie production ventures.
If you are working on an independent film, which is to say a movie production outside of studio development, then you are going to have outside investors of some sort. These investors are taking a risk on your project by sinking money into, hoping that they will see their money back as well as a return on top of their investment. This return is going to be based on something that is outlined specifically in your business plan and then contractually with them, and as the Producer you must make sure that you have covered this otherwise there are a lot of legal liabilities at stake. Most contracts will outline that the original investment outlines the cost of the production, and is immediately returned once the project has recouped its budget. This is to say, once the film is sold or the financial returns come in this money is immediately given to the investors who provided the budget. After that, you will give them the percentage of returns that was outlined in their original contract. This is going to be outlined in negotiations, but is often a percentage of profits after the recoup of the original investment. This all needs to be outlined to the dollar ahead of time otherwise there is the possibility of legal liability or financial lawsuit.
You are going to need to have EOS insurance on your production, which is a risk management insurance that is supposed to be the bond that you have in case of problems or legal liability. The EOS insurance cost is negotiated based on the amount of risk your project has. If the the Director is older and has health problems that could lead them to death during the production, the insurance will increase. If your project is based on fact and no life rights have been purchased of the people being portrayed, your EOS insurance will go up. If you are filming in a location that is not politically stable, your EDO insurance will go up. It is up to you when you are putting together your business plan for your movie production to try to outline what will affect the EOS insurance cost, ways to lower that, and then ways to include that into your film's budget.
The business plan for your movie production is really going to culminate on how it is to regain its budget and retain profits. It will do this through distribution deals, as well as other possible avenues such as merchandising rights and product placement. Traditionally, distribution is the main source of financial reward for your project and so your business plan should include strategies for acquiring a distribution deal. This should outline film festivals, company contacts, and ways of presenting the project to those who may want to purchase it for specific markets.